Citibank: Korean banks not interested in acquiring company’s Southeast Asian retail business

Citibank Korea is selling its retail banking business, but it was reported that none of the local banks is interested in acquiring it. The reason cited for their indifference is the fact that none of them feel the immediate need to do so.

As per The Korea Times, this is because, at this time, most of the banks in Korea are working on improving their own brand value, and this is their main focus right now. An official from the banking business explained that this is the case in most lenders in the country.

Looking for potential buyers

Citigroup was said to have contacted several banks in Korea that are operating in Southeast Asia. They were asked if they are interested in taking over its bank's consumer retail business in the Philippines, Vietnam, Thailand, and Indonesia.

The potential investors were then asked to submit letters of intent (LOI) for the acquisition and set the end of June as the deadline. However, the due date went by, and none of Korea’s major banking companies that include Woori, Hana, Shinhan, and KB, submitted the letters.

"Citigroup wants to sign a deal to sell the regional business as a whole, which still comes as a burden for potential investors here," an official from one of the banks stated. "It is realistically impossible for us to push ahead with the deal without obtaining a license to operate a bank business in all of the countries, as Citi prefers to reach a purchase of assets and assumption of liabilities (P&A) deal."

A professional in the financial industry said that the chances for Korean banks to buy Citibank’s Southeast Asian retail biz are really low. They are concentrating on growing their own brands in Asia, so there is no room for investing in another bank’s business.

Citibank Korea struggling to sell its consumer unit

The struggle to sell its retail assets became evident last month. Business Korea reported that while there were companies that submitted LOIs, the obstacles in the acquisition process may put them off. For instance, potential buyers may not accept Citibank Korea’s pledge not to lay off its employees even after the acquisition.

Moreover, if a company buys Citibank Korea’s retail business, it is also likely to face labor unions’ protests. This will be a big problem not just for the Korean unit of Citi but for the potential buyer as well. This is apparently another reason why major banks did not express intent to have a deal with Citigroup.